Regulation and Ethical Responsibilities Flashcards
7 cards from real IFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulation and Ethical Responsibilities flashcards as text
Under Canadian AML legislation, registrants must report suspicious transactions to:
Answer: FINTRAC within 30 days
FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) is the federal body that receives suspicious transaction reports under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
The 'suitability' obligation under NI 31-103 requires that a registrant:
Answer: Ensure recommendations are appropriate for each client's specific circumstances
Suitability requires that each recommendation or trade take into account the client's KYC information, including financial situation, risk tolerance, and investment objectives.
A registrant who knowingly submits a false or misleading document to a securities regulator may face:
Answer: Administrative penalties, fines, and possible criminal charges
Submitting false documents is a serious regulatory violation that can result in administrative penalties, fines, disgorgement of profits, and referral for criminal prosecution.
Which of the following describes a 'conflict of interest' that must be managed under NI 31-103?
Answer: A situation where the registrant's interests could improperly influence advice given to a client
A conflict of interest exists when a registrant's personal, financial, or business interests could compromise their ability to act in the client's best interest.
The 'know your product' (KYP) obligation requires registrants to:
Answer: Understand the structure, risks, costs, and features of products they recommend
KYP requires registrants to conduct reasonable due diligence to understand each product's features, risks, costs, and suitability before recommending it.
An investor purchases a mutual fund with a Deferred Sales Charge (DSC). Under typical DSC schedules, what happens if they redeem within the first year?
Answer: They pay a redemption fee that decreases over the holding period
DSC funds charge a redemption fee that typically starts around 5–6% in the first year and declines each year until it reaches zero, usually after 5–7 years.
Under Canadian privacy legislation (PIPEDA), a mutual fund dealer must:
Answer: Obtain client consent before collecting, using, or disclosing personal information
PIPEDA requires organizations to obtain meaningful consent from individuals before collecting, using, or disclosing their personal information, with limited exceptions.